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You don't need to run a domain to do a farm but I guess it will simplify your set-up a little in respect of permissions etc as you've said. You'll still need to do the usual MachineKeys syncing etc between servers to handle scenarios where requests are jumping between servers.

It's generally not recommended by MS to have your public facing web (or DB servers) also acting as DC's although I've done it on a number of occasions where we had limited resources and never had any issues.